Scandic Hotels Group AB

STO:SHOT

Earnings Call Transcript 2018-Q2

[Operator]

Ladies and gentlemen, welcome to the Scandic Hotels Group Q2 2018 Report Call. [Operator Instructions] I now hand the floor to our host, CEO, Even Frydenberg. Mr. Frydenberg, please begin.

[Even Frydenberg, President, CEO & Acting Chief Customer Officer]

Thank you very much, operator, and good morning from Stockholm. Thank you all for joining this presentation of the second quarter results for the Scandic Hotels Group. With me today, as usual, our CFO, Jan Johansson, who in just a little while, will take you through the financial part of this presentation as well as Henrik Vikström, our Head of Investor Relations. Now let's start on Page 2 of our presentation with the summary of the second quarter. Market conditions, as you can see, were good, and we saw an overall good demand situation with RevPAR rising in all of our markets in the second quarter. Our sales increased by 26%, driven by the additional rooms we had in operation and about 2/3 of this sales increase came from the acquisition of Restel. On a like-for-like basis, our sales growth was 4.3% in the second quarter, including some positive impact from calendar effects. For the first 6 months of the year, we saw a like-for-like sales growth of just under 2%. We are pleased with the results, and our adjusted EBITDA improved in all of our markets both in the second quarter and through the first half of the year. The integration of Restel has been according to plan. As you may remember, we started the rebranding of the Cumulus hotels in February. And at the beginning of June, we completed the last of the 34 rebrandings, keeping in mind that of the original portfolio of 43 hotels, 7 are [ IG ] branded and 2 will be sold. Restel has also started to contribute positively to our EBITDA as of the second quarter. Finally, in Q2, we also announced a change in the Scandic Group management team, where we have appointed 3 new members to further strengthen the competence in digitalization, marketing, branding, sales and distribution. Now, if you will turn to Page 3 where we talk about the RevPAR improvement in the market. We saw good demand in all of the markets and the RevPAR growth was between 4% and 7% in all of the Nordic markets in the second quarter. The quarter wasn't actually positively impacted by calendar effects, especially in Norway, as Easter fell partly in March this year. Having said that, we estimate that the market RevPAR growth was positive in all markets also when adjusting for calendar effects in the quarter. But naturally, it's more relevant to look at the first 2 quarters combined to get the full picture of the underlying market development. RevPAR in Sweden was up by almost 5% in the second quarter after 4 quarters with close to no growth. It was encouraging for us to see that the improved market balance in Stockholm where demand growth was largely in line with supply growth. Market RevPAR in Stockholm improved in the second quarter and was up by 3.9% year-over-year and was particularly strong in June. This was as expected and previously communicated, driven by good and steady demand growth, which increasingly compensates for the supply increase that we saw in 2017. The highest growth rates in the second quarter was in Norway, of which a large part naturally will be explained by year-over-year calendar effects. In Denmark, the market also showed good growth, with market RevPAR growing 4% with continued very high occupancy rates. We do not have market data for the full quarter for the Finnish market, but the market RevPAR growth was about 4% for April and May, and it was clearly positive also for the full quarter. Now if you turn to Page 4, you can see Scandic's RevPAR development in the quarter in local currencies, as well as on a like-for-like basis. On a group basis, our like-for-like RevPAR was up by 4.1% in the second quarter, and again, with positive developments in all markets. In the total first half of the year, like-for-like RevPAR growth was 1.5% with positive and stable development in most markets. Sweden showed a good new trend, where our like-for-like RevPAR was up by 3.9% in the second quarter, while it was flat for the first half of the year. Development in the second quarter was helped by a much-improved market balance in Stockholm. In Norway, our like-for-like RevPAR growth was 7.4% in the second quarter, and we estimate that the underlying growth adjusted for calendar effects was in the region of 2%. For the first half year, RevPAR in Norway was up by 2.6%. In Finland, the like-for-like RevPAR growth was above 5%, both for the second quarter and for the first half of the year, while total RevPAR in local currency was down. Now this difference is naturally explained by the fact that the former Restel hotels had lower RevPAR than the heritage Scandic Finnish operations. In Q2, Restel accounted for approximately half of our revenues in Finland. In Denmark, we see a relatively flat RevPAR performance in the Scandic portfolio, and we have taken additional action to ensure that we better capitalize on the underlying market growth to continue to drive Scandic RGI, as we have earlier in the year. Now if you turn to Page 5, we'll talk briefly about the Restel integration. We are quite pleased with the integration process and the time line that we have achieved. As mentioned, we started the rebranding of the Cumulus hotels in February, and it was completed in the beginning of June. And we also have completed the merger of the Scandic and Restel support offices and their back-office functions. The integration has so far gone according to plan, and we expect the total integration cost and CapEx to be slightly lower than what we've previously communicated. Restel contributed to our adjusted EBITDA in Finland by SEK 40 million in the quarter, and we expect this contribution to increase in the coming quarter, as Q3 historically, is a seasonally strong quarter for the Restel part of our portfolio. As I'm sure you'll remember, a condition for the regulatory approval of the transaction was that we needed to divest 3 hotels in Finland: one in Kuopio, one in Pori and one in Lahti. We have now signed an agreement for Cumulus Pori, and we expect to sell the remaining 2 hotels before the end of 2018. Now we have identified cost synergies within marketing and sales, procurement and IT, and we expect to start to see some benefits from these already during this year. However, as we have said from the beginning, the main potential of this transaction is on the revenue side. We believe that, over time, it will be possible to further drive both occupancy and rate when the former Restel hotels and their staff are fully integrated into our sales and distribution structure. If you now turn to Page 6, you will see an overview of our current pipeline. At the end of Q2, we had an existing portfolio of over 50,000 rooms, and the pipeline amounted to almost 5,500 rooms, corresponding to approximately 11% of the existing portfolio. We've had an extremely active start in the first half of 2018, with important hotel openings in a number of key destinations, such as Scandic Helsinki Airport, Scandic Landvetter in between Oslo and Oslo Airport, and the Scandic Museumsufer in central Frankfurt. And this activity continues into Q3 where we, in July, already have opened Hotel Norge by Scandic in Bergen, one of Norway's most prestigious hotels. And in September, we will open Scandic Kødbyen, a fantastic new hotel in Copenhagen [ by our ] meatpacking district. It should also be noted that 2 of the hotels in the pipeline are existing hotels in Finland, and they have been closed long term for renovations. Scandic Marski in Helsinki and the Holiday Inn from the Ruoholathi portfolio, also in Helsinki, will both open again in 2019. In addition, 3 hotels that we will divest in Finland will affect the total portfolio negatively by about 400 rooms. Approximately 1/3 of our pipeline is in the high occupancy city of Copenhagen, where we will open one hotel per year between 2018 and 2021. Now please turn to Page 7. As you may have seen, on June 18, we announced some changes in our management team, as we've seen a need to strengthen our expertise within digitalization and new technology, brand strategy and marketing and the fast-changing area of sales revenue management and distribution. The responsibility of the former Chief Commercial Officer will be divided into 2 different functions: a Chief Customer Officer, responsible for brand, marketing, loyalty and customer experience; and a Chief Commercial Optimization Officer, responsible for sales, revenue management and all distribution channels. In addition, in order to drive digitalization and further operational efficiencies, we have elevated the position of Chief Information Officer included as an integral part of the group management team. Niklas Angergård, who comes from Tieto, will join us in Q3 as Chief Customer Officer, and Ann Hellenius who comes from Bankgirot will join us in Q4 as Chief Information Officer. Jan-Lundborg was an internal recruitment and has already taken on his position as Chief Commercial Optimization Officer. I must say that I'm personally really impressed with the knowledge and track record of Ann, Niklas and Jan, and I'm really looking forward to have them all up and running fast as members of our great management team here at Scandic. So that is my summary introduction. I will now hand it over to Jan, who will take you through the financial part of the presentation.

[Jan Johansson, Chief Financial Officer]

Thank you, Even. Thank you, and we'll start at Page 9. And here, we have the 4 key takeaways from the second quarter, continued strong top line growth, 26%. If we exclude currency and the effects from the Restel acquisition, the growth was around 8%. So the primary reason behind the strong top line growth is obviously the inclusion of the [ 4 ] premium hotels coming from the acquisition of Restel. Also important, we have a like-for-like growth of 4.3%., and Even had talked to you about that. It's supported by reasonably stable market conditions and also positive calendar effects during Q3 -- Q2. With regard then to results, our adjusted EBITDA was SEK 157 million higher than last year, up to SEK 618 million. That's a 34% uplift. Former Restel operations have contributed SEK 40 million. In addition, we had a positive valuation effect on energy derivatives of SEK 31 million. Looking into the balance sheet. Despite significant investments in Q2, both in new capacity, as well as including the current portfolio and also during the Restel rebranding, we maintained our net debt-to-adjusted-EBITDA ratio at 2.6x, which is an improvement compared to Q1 when we were up 2.8. And then we go and look into the market overview and we'll start with Sweden. And you have to remember us earlier talking about the supply increase in Stockholm causing a negative RevPAR development in Stockholm, and also, of course, impacting the total Swedish number. You can see from this graph here now that we have a better balance between supply and demand. Demand is a little bit impacted by calendar effects, which hasn't affected the supply. As you can see the increasing supply as lower than, obviously, as we are meeting stronger comparables with last year. The development here in Sweden is by and large explained by what's happening in Stockholm, and you can also see now that this late development has led to improved occupancy and pricing. However, be a little bit mindful now that Q2 is positively impacted by calendar effect. Restel Sweden, excluding Stockholm, have had a steady RevPAR increase all over. You can say for both the first and the second quarter. Going west to Norway, we had -- have had a limited supply, together with the housing demand, which have driven a quite strong improvement in RevPAR, especially then during 2017. However, we see now that more supply has come to the market, especially down in Bergen and Stavanger, and that has led to a little bit of a slower development then in RevPAR. If we look into H1, which is not less of a [indiscernible] [ drop ], we can see a little bit of softening due to the supply increase, which I talked to you about. We have a RevPAR for the first 6 months of 2.8%, not a bad number, but it's lower than before. If we then put -- try to put Finland into the picture, we haven't actually had a picture in Finland. But if we would try to do that, we would cover approximately 80% of our business. We would see that in Finland, in isolation, we have 5%. I mean, taken together now, that's our 3 largest markets. The total RevPAR development in these 3 markets are actually on a rather healthy level. But be mindful that Norway will not repeat the strong development that we've had in 2017 in terms of market RevPAR. And then we go down to Page 12, which is actually the sales analysis, and here, you can see, the different drivers behind our top line growth. We talked about that before, H1, we have a growth of SEK 1.7 billion or 24%. SEK 1.5 billion or 21% is coming from net portfolio additions and our outlook, that SEK 1 billion is coming from the Restel operation. As I mentioned also, if you were to exclude currency and Restel, growth is around 8%, which is not a bad number. Translation effect has been positive due to the very weak Swedish krona, which you all are familiar with. We have for H1, you can say broadly a like-for-like sales development, which was more or less in line with the market RevPAR development, with a gradual improvement in Sweden then coming from the Stockholm operations. Throughout H1, we have also had a very good like-for-like growth in the Finnish operation, and we can see that together why on this page, 5.3% for H1, which is a good number here. Looking into the other markets, you can see that there is a more moderate growth in those [ states' ] market.Turning then to Page 14, we have our -- you can see here that we have a higher adjusted EBITDA in all our business segments, both in June and in H1. And as mentioned earlier, in Q2, the profit uplift was SEK 157 million, out of which Restel was SEK 40 million, and I have found a line that we have a positive valuation effect on energy hedging contract for SEK 31 million, which is included with the headline central cost group adjustment. For the first 6 months, adjusted EBITDA was up to -- was up SEK 180 million. Margin was down a little bit from 9% down to 8.6%, which is explained then by Restel, which are on 4% for the first 6 months, and also that we have a margin decline in the Sweden. And that is finally explained by the Stockholm operation, though we have not come back to the old levels yet. So -- but after talking about Finland and going back to that, even if we have included Restel, it would -- given a 4% margin, and we have to also lift here and say that the like-for-like portfolio have actually had a very solid margin increase in Finland, which also is probably giving us a very soft [indiscernible] and double-digit margins in Finland, which I think is important to highlight. And that will be a little bit more technical then. I would like then to take a moment to explain the difference between adjusted EBITDA and EBITDA, and the reason for this is the accounting gets a little bit more complicated, [ not at least ] now when we have more financial lease accounting to take into account. The purpose of the key measure adjusted EBITDA, as we have is, of course, to express the underlying EBITDA of the operation, which is also a good express of the cash regeneration before investment. The difference between the reported EBITDA and the adjusted EBITDA will increase significantly next year when the new lease recommendation IFRS 16 come into effect. So we will already now start then to disclose the difference so we get used to this well ahead of 2019. And the reason is, of course, that the part of the rental payments will be reclassified as depreciation and interest. So our ambition with adjusted EBITDA key measure is to try to express the cost definition taking all rent payments into account. To enhance comparability over time, we also exclude items, the fixed income probability and pre-opening costs. The pre-opening costs include hiring and training of personnel as well as payroll costs ahead of opening of a new hotel. So looking into the numbers here and the graph -- or the exhibit on Page 14 here, we put back then the effects from financial leases in the number. Pre-opening costs is on a higher level this year, and this is due to a record high number of openings here. I think, this year, in total, we have about 7 openings. First 6 months, I think we have opened 5 or 6 hotels there, so that's the reason for this very high number. In terms of fixed income probability expressed, the integration cost of Restel operation, here, we have posted so far this SEK 104 million. There will be some costs also in Q4 -- Q3. And before we close this phone conference, we will have an estimate for the number. Then going into Page 15, we see the rest here of the income statement. And we have also here separated them, the fixed and financial lease in a different column, which means that you can actually compare actuals with that. So you can compare the left-hand column with the right-hand column, and it's actually the same way of accounting as you can see there. The important thing -- well, a few things to list after, I think, is that even if you exclude, [ therefore, ] financial leases or when you do this, you see that we have an increase in EBIT despite the fact that we take on higher depreciation and amortization with the inclusion of results. Also, with regard then to net interest net or financial net, it's more or less in line with last year, despite that we have paid SEK 1 billion for Restel on finance debt with cash due to a much better loan agreement and a more efficient commercial paper program than we have had before. This means that we have a pretax profit increase of SEK 20 million compared with last year. Looking into EPS for the second quarter, it's -- that's uplift of 24% despite the slight negative effect from this accounting. And the secret behind that boost of EPS is that we have made the tax reevaluation of SEK 40 million due to a decision in Sweden to lower the taxes after 2021. This means that we could have a positive valuation effect of deferred tax liabilities. Try to deep dive, diving a little bit deeper into the EPS development on Page 16. We have tried then to perceive what is the underlying EPS development. First then, we need to adjust for the lease accounting and also on reevaluation effects, which we have on the debt previously to arrive on a more kind of cash base EPS, which we then label adjusted EPS. The cash base EPS is important to understand the dividend capacity of the company. If we do that, we see that we have a decline if we look into the first months from 1.89 to 1.20. However, if we adjust for the onetime effects, which we have in both years with regard then to Restel, we are more or less on a similar level. So far, if you make kind of a pro forma calculation of the contribution from Restel, excluding the integration cost, we can see that, that is negative 26. But actually, we have made a pro forma calculation also for financial net. But you can also see that in -- if you're looking into the second quarter in isolation, it's actually a slight contribution from the Restel operation, which is not a bad sign. Looking then to Page 17, we have our cash flow here. We have usually fees, no working capital build-up or less negative working capital, I should say. This is on a lower level than last year, which is good. On the other hand, we have higher investment now, as we have talked about both in new capacity as well as in existing hotels as well as in rebranding the former Restel operation. This leads to a negative cash flow for the first 6 months of SEK 340 million.Regarding net debt, we are on SEK 4.4 billion, a little bit negatively hard of the Swedish krona, where we have a negative reevaluation effect of foreign debt. We have unused credit facilities of around SEK 1 billion, and as I said before, a leverage of 2.6x, which we, of course, expect to decline in the second half, which is usually cash-generative through the release of working capital. We also expect that CapEx should be lower the second half of the year than the first half of the year. And with that, I leave the word back to Even.

[Even Frydenberg, President, CEO & Acting Chief Customer Officer]

Good. Thank you, Jan. Again, very important to keep focused on the upcoming financial lease accounting changes that are coming in next year. So it's good we get a chance to talk about it now. If you now turn to Page 18, I will try to wrap up the call here today by talking a little bit about the outlook. With the market adjustments that we have seen and are seeing, we expect like-for-like sales growth in Q3 to be pretty much in line with the growth rate we achieved, January through June this year. As mentioned before, the demand patterns are generally quite good, and the weak Swedish krona might also have a positive impact on our Swedish operations during the summer months. We look forward to further improve in the results coming from the former Restel hotels, as the third quarter, as mentioned before, is normally the seasonally strongest quarter for that part of the portfolio. And we have adjusted downwards our forecast for the integration costs for Restel. The total integration cost is now expected to be around SEK 120 million versus our previous forecast of SEK 150 million. And similarly, the total CapEx in 2018 related to the Restel integration is expected to be around SEK 30 million versus our previous forecast of up to SEK 50 million. And finally, we continue to remain very focused on continuously adjusting our cost to the rapid changes that we are experiencing in the market that we operate in. With that, that summarizes our presentation and we'll hand it back to the operator for Q&A.

[Operator]

[Operator Instructions] Our first question comes from the line of Karl-Johan Bonnevier of DNB Markets.

[Karl-Johan Bonnevier]

A couple of questions more on Restel and Finland, if I may. Looking at -- you gave us a number, what kind of impact Restel has on the revenue numbers and EBITDA number. How does that compare to what Restel did last year? Do you see the same progression, say, like-for-like within the rest of the portfolio, as you've seen in your own portfolio?

[Even Frydenberg, President, CEO & Acting Chief Customer Officer]

The -- thank you, Karl, first of all, for the question. The performance of the Restel portfolio year-over-year is relatively consistent and flat, but not as strong as we have seen in the heritage Scandic-branded portfolio. I think one of the reasons for that is that we've been very focused on quickly getting the systems integrated, getting the rebranding done so that we can start to better utilize the Scandic distribution systems in the second half of the year. So the short answer to your question, the Scandic -- heritage Scandic portfolio has performed better year-over-year than the Restel portfolio.

[Karl-Johan Bonnevier]

And when you look at now taking down the integration cost and the need for turnaround CapEx in the operation, is that -- you're not finding any skeletons in the closet? Or how should I look at that?

[Jan Johansson, Chief Financial Officer]

I think when we're talking about the rebranding CapEx, it's actually very much signage and things like that. Of course, we -- when it comes then to see to -- so that we have a hotel portfolio, which is in line with our brand promise and so on, I think we would -- I mean, obviously, we need to work through that portfolio and talk of that portfolio, we can already say now. And we -- I think we said that also when we made the announcement of the acquisition. We need to require some investments. And we are actually are ongoing with a couple of them already now.

[Karl-Johan Bonnevier]

I also noticed in the presentation that you highlighted the CapEx of SEK 1.3 billion for the hotel pipeline you have. Is that -- how rough of a number is that? And is that what we should see coming on top of, say, your normal 3% to 4% CapEx on maintenance, so to say?

[Jan Johansson, Chief Financial Officer]

Exactly. That's the totally the ambition here because we have experienced that when we talk to you and we talk to other that there is a need to be that big to project the cash generation ability of the company. And to be able to do that, you need to find a number for the capacity development and the CapEx requirement for that. So that's the reason why we took the decision to put in the CapEx, not only the number of rooms. You might -- you can calculate backwards and maybe arrive on a CapEx number, but we thought it's better that we give our estimate. That might change, but I mean, it's -- we should actually know that better than anyone else where we should try to arise. So that's the purpose of it. You have to try to be as transparent as possible with the cash generation going forward.

[Karl-Johan Bonnevier]

Excellent, perfect. And finally, just looking at the demand situation, you highlight the stabilization in Stockholm, and obviously, the Swedish krona, as you point out, is very weak. Have you seen that in your booking patterns now going into Q3 that there is a, say, higher international kind of proportion of demand in there, also in your books?

[Even Frydenberg, President, CEO & Acting Chief Customer Officer]

Yes, Karl-Johan, it's a great question. We keep getting questions on what does the summer look like for Scandic. And like we tell, you can't build a strategy on the summer good or bad weather, but what we've seen is, I think, a combination of great weather and good currency bringing more international leisure guests into -- in particular, the larger cities during the summer so far, and also on what we can see for the near future. What we also see, which here, I think you have seen everybody else in related industries talking about as well is that the Swedes' turn to stay home this year and not go to the south, again, probably weather-driven. Now that doesn't mean that they all come to the city. But I think we have actually rather seen a trend where the Swedes staying home are staying away from the big cities and going to the country and going to the seaside. So it's good that we have international mix coming in. And for a company like us, of course, that has a very good geographic distribution. Also, outside the city, this is a good sign. But I would just like to repeat that we believe that the third quarter will be very much in line with what we've seen in the first half of the year.

[Operator]

Our next question comes from the line of Jamie Rollo from Morgan Stanley.

[Jamie David William Rollo, Managing Director]

The first question is just on the margin beat from the lower rent to sales ratio for the heritage Scandic business and also the energy and central cost benefits. Could you please talk a bit more about both of those, what's driving it, whether there's any reversal of those factors in the second half of the year, please?

[Jan Johansson, Chief Financial Officer]

No. If you take -- I mean, if you take the lower rents in the core Scandic there, I think it's -- I mean, that's typically what you see here when you -- when we drive the business upwards here, and we have a cost in sales development because, I mean, we have an element of fixed renters, which is good to have when it goes good. Not so good to have when it goes down. So I think that this -- you shouldn't actually expect any significant change there. I think the most important thing here when thinking about the ramp in relation to sales is the impact from Restel because we have a very strong -- or a stronger operational leverage there due to a much higher amount of fixed leases within Restel. During the top season, when you come into this high occupancy months with the Restel portfolio, we expect to see very, very high margins there due to this higher operational leverage here. But of course, it works the other way around also. But we will need to separate that for the year, so we will report it separately. And I think that next year we will more see a combined Finnish operation then. So -- and when it comes then to the energy derivatives, I mean, this is -- I mean, we have worked with energy hedging for a number of years. Normally, the effect, the market valuation effect has been wonderful. It's a couple of million, up and down. What has happened this year is that there has been a quite sharp increase in energy prices in the Nordic, which means that the value of this derivative has increased. From an accounting point of view, my conclusion here is that we need to maybe change the approach, which we account for this because this is a market valuation of the future value of this derivative. And of course, if we change into hedge accounting, that valuation effect will go up and down in equity instead, and we have less of a volatility in the income statement. So our ambition here is to see whether we can turn this into a kind of hedge accounting to take away volatility in the income statement. But this is the first quarter where we have had significant effect due to the increase in energy prices, which is not a good thing. But the good thing is actually that we have it hedged.

[Jamie David William Rollo, Managing Director]

So just from the first phase, I take your point on the fixed rent, but you had quite a big Easter benefit, of course, a 3% benefit to Restel. So I'm just wondering, obviously, that doesn't recur in the second half of the year, so we shouldn't expect the rent ratio to fall again. Is that what you're saying when you're saying no further change?

[Jan Johansson, Chief Financial Officer]

Sorry, Jamie. What I think it may be, when looking into Q2 in isolation, of course, you have a harder calendar effect. I think looking into the 6 first months is probably a little bit of a better reflection for what to expect for the rest of the year.

[Jamie David William Rollo, Managing Director]

Okay. And on the derivatives, are you saying you might put that below the lines, so it will not benefit adjusted EBITDA on the full year, is that what you're saying?

[Jan Johansson, Chief Financial Officer]

I mean, it's -- what you do is actually as we don't have the documentation in place to account for it as a hedge, and we have the total volatility here for reevaluation. And what I will likely try to find is a way to account for this in some other ways, so even if we have these big swings in electricity prices, that volatility should be in equity instead of the income statement. But I'm not there yet because it's not good to have so much volatility in the income statement because this time it's positive, but it could also go the other way around.

[Jamie David William Rollo, Managing Director]

Okay. And then the final question was on the upside from rebranding Restel to your core brands and the -- and improved distribution network. Could you help us understand please the sort of benefit to RevPAR that might bring? Is that very much a 2019 benefit as you negotiate corporate contracts later this year? Or could that come in the second half?

[Even Frydenberg, President, CEO & Acting Chief Customer Officer]

I think there is clearly a combination. I think we'll see some benefit in the second half of this year. But the true benefit will come in when both corporate and leisure contracts are negotiated for 2019 and the whole Restel portfolio, in principle, is in their contract already for this year. So the big impact will be next year. But clearly, there are some opportunities over in the second half of this year, and I think we'll start to see that in the coming 2 quarters.

[Jan Johansson, Chief Financial Officer]

Jan here, I think also here to add on to what Even's saying, I think this is also a focused question because there has been quite a lot of management focus now on rebranding on actually moving 2 organization into one organization. And so -- and we are getting more and more through that phase. And when we do that, and we feel that we have control over that, obviously, the commercial focus will increase in the organization, and then we should start to see this effect.

[Operator]

[Operator Instructions] As there are no further questions at this time, I'll hand back to our speakers for the closing comments.

[Even Frydenberg, President, CEO & Acting Chief Customer Officer]

All right. Thank you very much, everybody. Really, again, thank you for joining us for this Q2 results in the middle of a hot summer for many of you. And I wish you all a good summer. And if we don't talk before Q3, then enjoy the rest of the summer and the quarter. Take care.